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December 22, 2019

Congress Permanently Repeals Health Taxes Opposed By MSCI

Last week, the U.S. Congress passed and President Donald Trump signed H.R. 1865, the fiscal year 2020 spending bill that repeals three health care-related taxes that the Metals Service Center Institute (MSCI) had opposed since they were passed in 2010 as part of the Affordable Care Act. Included in H.R. 1865 is a full repeal of the 40 percent excise tax on employer health care coverage that is often referred to as a the “Cadillac Tax.”

In a letter sent to lawmakers in early December, MSCI and more than 1,000 trade associations, labor unions, and businesses had asked for repeal the levy, which was a 40 percent tax on some employer-sponsored health care plans and that was set to take effect in 2022. As written, the provision would have impacted employer-sponsored plans that cost more than $11,200 a year for individuals and $30,150 for families. Employers would have been taxed on anything above those thresholds.

The letter said, “While this tax was intended to only hit Americans with ‘gold-plated’ plans, the reality is that very modest plans covering low- and moderate-income working families are projected to trigger the tax simply because they incur greater health expenses.” It went on to explain that “the tax will disproportionately affect the health plans of women, seniors, rural communities, the sick, and the disabled” and will penalize small businesses “that already struggle to offer health care coverage” for their employees.

H.R. 1865 also included permanent repeal of a 2.3 percent excise tax on medical device manufacturers, and of the Health Insurance Tax (HIT). Repeal of the HIT, which was a levy imposed on consumers’ health insurance premiums, is expected to save more than 142 million American families about $500 each annually. You can learn more about these taxes, and why MSCI opposed them, on our advocacy page.

In other tax news: The U.S. House voted 218-206 last week to approve a bill that would lift a $10,000 limit on state and local tax deductions, known as SALT. As Connecting the Dots reported last week, the bill would raise these taxes on pass-through companies by 1) increasing the top rate pass-through businesses pay from the current 37 percent to 39.6 percent and 2) lowering the income threshold of the top rate from $622,050 to $496,600 (Joint) for the years 2020 through 2025, after which the 37 percent rate is scheduled to expire under current law.”

The Wall Street Journal reported the legislation stands little chance of passage in the Republican-led Senate, and President Donald Trump has threatened a veto on the matter as well.